Home About Taxgate Members Hall Site Search Plus! Link to us Interview us The Store Member or not, you can create positive effects with these laws by themselves. Gross Income Claims are Thurston's research findings applying to Citizens living and working domestically. He insists that you take this information to a 'competent' attorney for verification. Site View Dictionary Nav Tips Chatroom every Wednesday 8:30 PM EST

2. If you are not receiving 'Gross Income', then examine the legal steps needed to correct your situation.

'Income Tax' and 'wages' apply only to those who have earned 'Gross Income'... if your income is not Gross income, then what is it? It is 'exempt'...

Let's determine whether your 'income' is in fact 'Gross Income' as outlined by the Congress and the Secretary of the Treasury:

First, we are going to show you the definition of 'Gross Income' per Section 61 which is the standard definition referred to by the professionals.

We will then view the 16th Amendment and conclude that it is accurate.

The Federal Regulation that states where the infamous and until recently, low profile, 'list of sources' can be found.

Then we will show you the 'list of sources' admitted by the Secretary of the Treasury and the Congress.

For good measure, we'll examine the definition of 'exempt income' which applies if your earnings are not 'gross income'!

Ready? Let's go!

Let's look at the definition of Gross Income:

Section 61 of the Internal Revenue Code defines "Gross income" as:

IRC Section 61 (a) GENERAL DEFINITION. Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:

(IMPORTANT NOTE: The list below is comprised of 'items' as stated above, not 'sources'... don't give up yet... the below 'items' must originate from the listed 'source' to be 'items' of 'Gross Income'.)

Here are the 'items': (1) Compensation for services, including fees, commissions, and similar items; (2) Gross income derived from business; (3) Gains derived from dealings in property; (4) Interest; (5) Rents; (6i) Royalties; (7) Dividends; (8) Alimony and separate maintenance payments; (9) Annuities; (10) Income from life insurance and endowment contracts; (11) Pensions; (12) Income from discharge of indebtedness; (13) Distributive share of partnership gross income; (14) Income in respect of a decedent; (15) Income from an interest in an estate or trust. 1.861-8(a)(4):

Good, we know about these 'items'... we grew up hearing these 'items' repeated through the years as they are components of gross income, right? These above items have been indicated by amateurs and tax professionals alike to be 'sources'... they are not sources.There is a difference between 'items' and 'sources'. Again, these are 'items' of gross income only when they 'derive from' specifically listed sources. It gets easier...

We also know that the 16th Amendment specifies the authority of the Congress to tax... Let's look:

The Constitution of the United States Of America

Amendment XVI.

"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration." (emphasis added)

So far, so good.. we agree with this.

Now let us dispose of this matter of 'sources' which keeps 'popping up' whenever we look at a definition or description of 'Gross Income'..

Do our law books tell us where we can clarify this 'source' stuff?? Indeed they do!... sources are described by the Secretary of the Treasury in the Code of Federal Regulations and are the legally binding definition of 'sources' that must apply to income for it to be classified as 'Gross Income'.. Look below at CFR § 1.861- 8(a):

Code of Federal Regulations § 1.861- 8(a):

"...The rules contained in this section apply in determining taxable income of the taxpayer from specific sources and activities under other sections of the Code referred to in this section as operative sections. See paragraph (f)(1) of this section for a list and description of operative sections." (Emphasis added)

The Federal Regulations make reference to 'sources' within the United States.. below are the only sources listed from which income must derive in order for it to be taxable for the purpose of the Income Tax.

Code of Federal Regulations 1.861-8(f)(1)

(i) Overall limitation to the foreign tax credit.

(ii) [Reserved]

(iii) DISC and FSC taxable income. (note: DISC is Direct International Sales Corp, and FSC is a Foreign Sales Corp)

(iv) Effectively connected taxable income. Nonresident alien individuals and foreign corporations engaged in trade or business within the United States,...

(v) Foreign base company income.

(vi) Other operative sections.

(A) "...foreign source items of tax..."

(B) "...foreign mineral income..."

(C) [Reserved]

(D) "...foreign oil and gas extraction income..."

(E) "...citizens entitled to the benefits of section 931 and the section 936 tax credit..."

(F) "...residents of Puerto Rico..."

(G) "...income tax liability incurred to the Virgin Islands..."

(H) "...income derived from Guam..."

(I) "...China Trade Act corporations..."

(J) "...income of a controlled foreign corporation..."

(K) "...income from the insurance of U.S. risks..."

(L) "...international boycott factor...attributable taxes and income under section 999..."

(M) "...income attributable to the operation of an agreement vessel under section 607 of the Merchant Marine Act of 1936..."

The above list explains clearly your 'gross income' involvement in light of the fact that the U.S. Supreme Court has determined that the Congress acts intentionally and purposely in the inclusion or exclusion of something in a law. Or simply, if a particular source is not on the list, then it is effectively 'excluded' from the Income Tax Act and subsequently the legal definition of 'Gross Income'.

The above list/regulation can be described simply as a 'fence'. The U.S. Congress gave the Secretary the task to encircle and delineate the only area from which 'Gross Income', and hence 'taxable income', can be derived or accepted from... and the Secretary published his understanding of what was expected of him in the regulations. The above list is in fact the only definition of 'sources' anywhere in the regulations. 'Whatever' is within the fence is 'allowed' to be listed as 'Gross Income'. If it is not within the confines of the Secretary's 'fence' or 'regulation', it is 'exempt'.

Some with a vested interest in taking care of your money for you, will argue that the phrase 'whatever sources' in the 16th Amendment means 'any and all sources'... yes again, we AGREE that it does.. 'any and all 'sources' within the list! The Secretary has defined them, then Congress agreed with the Secretary! And they are restricted to the above list, as it is the only list which defines sources! An entry for Citizens with domestic income does not exist on this list!

Remember from Law 101 that the power of the Congress and the authority it gives to the Executive Branch is limited to the contents of the law.

Let's put it still another way...

It is not always what is in a law that is important. Frequently what is not stated in a law is equally important.

Especially if you're assuming something is in a law (something the U.S. Supreme Court does not have authority to do), when it clearly is not there.

1.) Section 61 states that gross income is from 'sources' which are taxable.

2.) 26 USC § 861(a), states that the following items of gross income shall be treated as income from sources within the United States, and does not define the 'specific sources' of income from within the U.S., that are taxable.

3.) 26 CFR § 1.861 and following, are the Regulations promulgated by the Secretary of Treasury to implement 26 USC § 861, and prove that the items of gross income discussed in 26 USC § 861, are applicable only to foreigners and U.S. Citizens living abroad.

Additionally, all of the regulations applicable to 26 USC § 864, Definitions, are directed only to nonresident aliens and foreign corporations.

Significantly, the only application of the federal income tax upon the income of U.S. Citizens in existence is with respect to: (1) a U.S. Citizen's foreign earned income, and (2) the income of U.S. Citizens living abroad.

In good faith, let's take a look at 861. When you examine 861's regulations, you find the admission in 1.861-8 (a)(4), that income must come from a specific source to be taxable. If you examine the sources in 1.861-8 (f)(1), you will find that the domestic sources are plainly applicable to non-resident aliens and foreign corporations. The others listed are foreign sources that U.S. citizens would definitely be taxed upon. There is no direct mention of U.S. sources where U.S. Citizens can earn 'gross income'.

To wrap up this thesis, of the five sources listed in (f)(1), four of them are repeated as non-exempt income pursuant to 26 CFR § 1.861-8 (T)(d)(2)(iii). And pursuant to 1.861-8 (T)(d)(2)(ii)(A), all income that is exempt, excluded (not listed), or eliminated from the law, is exempt income.

Now the nay-sayers will say that these exclusions only apply to 861. So the next question is the same question we started with before getting into this regulation. And the question is, where are the other U.S. sources listed that are applicable to U.S. citizens living and working within the U.S.?

Since the law is so plainly structured to be taxing foreigners, and foreign earned income, we must have some specific citation of law, specifically taxing U.S. citizens on their domestic source income, as the Secretary has made the list of U.S. sources that are taxable in 26 U.S.C. § 861, applicable only to foreigners.

This legal fact fills in a lot of missing pieces in the income tax puzzle, yet the tax professionals we have encountered do not think so. Still, they refuse to answer the next haunting question: Why is it that the conventional school of thought believes that they can render an Act of Congress, The Paperwork Reduction Act of 1980, superfluous and of no legal effect, when we point out that the only form required to be filed by U.S. Citizens, pursuant to section 1.1-1 of the Code of Federal Regulations, is the 2555 foreign earned income form?

Try as one may, attempting to pass off § 61 defining "Gross income" as the section of Code as the law taxing all U.S. citizens on their U.S. source income, even if the income cannot be deemed to be from taxable sources, is dishonest in light of the construction of the statute. Since 26 CFR §§ 1.861-8 (f)(1) and -8T (d)(2)(iii) state plainly the taxable sources which a U.S. Citizen must have, to make income "Gross income" and thus "taxable income" (the latter being taxed in § 1). Is it any wonder that the proper Form to be filed, pursuant to Section 1 of 26 U.S.C. and 26 CFR by a U.S. Citizen is the 2555 Foreign Earned Income form?

Added support below...

'Exempt Income'

26 CFR § 1.861-8T(d)(2)(ii)(A)

"In general. For purposes of this section, the term "exempt income" means any income that is in whole or in part, exempt, excluded, or eliminated for federal income tax purposes." (Emphasis added)

"Exclusion" which is defined in Black's Law Dictionary, in part, as follows:

'Denial of entry or admittance.'

Isn't it fascinating that right after the Secretary stated this, he plainly listed income not exempt from taxation here as follows:

26 CFR § 1.861-8T(d)(2)(iii)

(iii) Income that is not considered tax exempt.

The following items are not considered to be exempt, eliminated, or excluded income and, thus, may have expenses, losses, or other deductions allocated and apportioned to them:

(A) In the case of a foreign taxpayer (including a foreign sales corporation (FSC)) computing its effectively connected income, gross income (whether domestic or foreign source) which is not effectively connected to the conduct of a United States trade or business;

(B) In computing the combined taxable income of a DISC or FSC and its related supplier, the gross income of a DICS or a FSC;

(C) For all purposes under subchapter N of the Code, including the computation of combined taxable income of a possessions corporation and its affiliates under section 936(h), the gross income of a possessions corporation for which a credit is allowed under section 936(a); and

(D) Foreign earned income as defined in section 911 and the regulations thereunder (however, the rules of section 1.911-6 do not require the allocation and apportionment of certain deductions, including home mortgage interest, to foreign earned income for purposes of determining the deductions disallowed under section 911(d)(6)).

NOTE: The only income above related to U.S. Citizens is (D)

This is of further importance as the definition of "wages" in § 3401(a) to be withheld from in accordance with § 3402, excludes all remuneration paid to U.S. Citizens by employers, except income which is deemed to be gross income under § 911, or other income related to foreign and U.S. possession sources.

This law confirms our position, in simple terms according to Black's Law Dictionary, that if the income in question comes from a source 'excluded' from the law, and thus not mentioned within the law as being taxable, it cannot then meet the source requirements of § 861, its regulations, and thus section 61(a) to be "Gross income", and is by definition EXEMPT.

This is a prime example of what we mean by the statement that... What is not within a law is just as important as what is!

A simple 'rule of thumb' to remember about the tax code:

The entire topic of 'The Income Tax', and the statutes regarding it, are builtchiefly around the foundation of 'Gross Income' as defined in § 61 of theInternal Revenue Code... and that our laws mean what they say.

In the Members Hall we will have complete pre-written letters and a myriad of other tools for our members to utilize based upon the above approach.

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The article below is the origin of the Taxgate site.

It is also the 'beginning of the end' for most 'income taxes' collected, the withholdings from remuneration alleged to be "wages", as well as those who 'allowed' the subject of 'Taxgate' to originate at all!

It is the culmination of decades of research, and the effort of many peoplewho have struggled to find and expose the truth of the Internal Revenue laws.Here we seek to make the essence of the income tax law simple, for thecommon man to understand, and thus increase numbers of theknowledgeable, in the public at large.

All theories and constitutional arguments ever postulated by any seeker of truth in theInternal Revenue laws will be revealed to the reader as an obfuscation or diversion, somejust as sinister as the publications of the IRS and words of discouragement from lawyers.

The simple truth of the law is that the entire 'income tax' isapparently built around the taxation of "gross income" as defined in§ 61 of the Internal Revenue Code.

The simple truth revealed in the law supports the fact that theincome tax is constitutional, but fails to address the fact that it hasjust not been properly applied by all of its users.

The essence of what is revealed in this article has been applied to State aswell as Federal income tax matters, as the States with income tax laws haveinvariably created their income tax laws to be wholly dependent upon theFederal definition of what is "Gross income". Also, this information isparamount to any IRS action whether it be a civil action where the IRS claimsmoney is owed, as "Gross income" was earned, a Criminal Matter where theIRS claims that there was a willful failure to file an income tax return on "grossincome" (but fails to prove gross income), as well as wage withholding.

By now you should have read the LAW101 section of this site (if you have not please doso now) and understand that the law means what it says. From that article you should alsosee that what a law does not say is just as important as what a law does say, asthe law specifically legislates only over that which is mentioned in the law.

For far too long we have allowed the law to be read to, and by, us with built-inassumptions, and presumptions of the status quo, to support the actions ofthe status quo. If such childlike trust and acceptance of the way things areseen by the majority and those alleged to be the most learned of our societywere to always be correct, then the Earth would still be flat by all printedaccounts.

This is neither doing service to the welfare of the people, nor the rule of law as enacted bythe Congress. Here we will demonstrate to you the actual law, that most people say is toocomplicated, or have just presumed to be too complicated, for someone to understand.

It is widely accepted by the courts, and most Americans who will comprise a jury, that in1913 the U.S. Congress enacted the 16th Amendment to lay a tax upon incomes from"…whatever source derived…" In the case of James v. U.S. the U.S. Supreme Court hasdetermined that the Amendment means exactly what it says, and that the "source" isimportant.

The same phraseology is applied in 26 United States Code (Internal Revenue Code) § 61(a),which defines the "Gross income, which is ultimately taxed as "Taxable income" (26 U.S.C.§63) in 26 USC § 1, and a return is required to be filed on, as set forth in 26 § 6012, to the effectthat the actual statute states that "gross income" is income from whatever 'source' derived.This is also confirmed by the U.S. Supreme Court in the case of U.S. v. Burke as the Courtagain has included the stipulation of "source" in its legal determination that all of the wordsin the law exist within the law with purpose and authority.

Before we continue, we must examine the legal definition of "source" as set forth in Black’sLaw Dictionary. The legal definition reveals that a "source" is not a thing, but is a place orcircumstance.

It is at this point that the first crucial error is made by the reader of the law, as the readerusually does not understand that the law means exactly what it says, and is not subject toanyone’s interpretation, as even the U.S. Supreme Court lacks any such power. The error iscaused by one reading the remainder of § 61(a), before the list of the items 1 to 15. Theseitems 1 through 15 have been read by millions to be "sources" of "gross income" when infact, as set forth in the rules promulgated by the Secretary of the Treasury in 26 CFR §1.861-8(a)(3) these items listed are not "sources" as set forth under the law but are merely"items".

Most accountants refuse to even see the word "source" in the law and thus avoid its verysignificance. This was done by one accountant recently, despite his pointing out that theword "source" reportedly appears 214 times in the United States Code. Such an approachrenders the word "source", as employed by the Congress, superfluous (of no effect) in theface of the fact that the law states that ‘items’ come from a ‘source’.

(There is only one small point upholding the accountant's position that items are sources,and that is the words of § 861 (no small insignificant point) which plainly state that the itemslisted within § 861 are to be treated as "sources" in regards to the U.S. What was tellingabout this point was redirected by the Secretary in the regulations, as the only places wherethe Secretary stated who had to be earning the U.S. source income, to have income subjectto the income tax, always referred to foreigners only.)

In our search for ‘sources’ we came upon 26 CFR § 1.861, the Regulation for § 861 Sources ofIncome from within the United States. This was the only section of law addressing U.S.source income and we hoped to find the taxable U.S. sources here. In the process welearned that we were further correct, as our understanding of the law is supported by thenext rule as shown in 26 CFR §1.861-8(a)(4). This law states that in order to have taxableincome, one must have items of gross income from a taxable "source" as listed in 26 CFR§1.861-8(f)(1). This next law lists all of the taxable ‘sources’ from which one must haveitems of income in order to have a taxable income for the purpose of the federal income tax.Upon review of this list, it should be clear to most U.S. Citizens that they never made anygross income as they never made any income from any of the taxable sources as set forthunder 26 CFR § 1.861-8(f)(1).

Now, for the doubters in the crowd, it has been set forth by the Secretary ofthe Treasury in the Code of Federal Regulations at 26 CFR § 1.861-8(a)(1) thatthese are the rules that his office has set forth to be used for the purpose ofdetermining income which is taxable for the purposes of the federal incometax.

Follow this next point...

The Congress wrote in the Amendment "…whatever source derived…",after which, the Secretary made a list of specific "sources" in the Code ofFederal Regulations, the Regulation was then published in the FederalRegister for correction before becoming the law as agreed to between theCongress and the Administration. Therefore, it is plain to see the legal fact thatthe Secretary has limited the taxable sources to those that are clearly listedin 26 CFR § 1.861-8(f)(1) for the law means exactly what it says, and theCongress has not protested the Secretary’s actions.

Furthermore, the Secretary has set this fact into stone, so to speak. The fact that 26 CFR 1.861sets forth the rules for determining taxable income for the income tax, this section of theregulations is the only such rule, there are no others. So, it is equally revealing in theTemporary Regulation of 26 CFR § 1.861-8T(d)(2)(ii)(A) that "exempt income" meansincome which is "excluded" from the law, and that § 1.861-8T(d)(2)(iii) lists the "Income thatis not considered tax exempt". Between these two sections of regulations and § 1.861-8(f)(1),that which is to be taxed is by law very limited.

Black’s Law Dictionary 6th Edition plainly states what the legaldefinition for an exclusion is. Therefore, that which is denied entryunder the law is "exempt income", at least in accordance with theinstructions given to the IRS by the Secretary of the Treasury.

This idea goes along with the premise of American law, that we are not anExecutive Monarchy where the government can claim authority over whateverit wishes without regard to law, but that each and every action of thegovernment shall be well grounded in legal and statutory merit.

Here you have it. In the most simplistic terms, available and free to all. The rootof the 'income tax' is in "gross income" as defined by law. The root of "Grossincome" is a specific taxable source as set forth in the law. Exempt income isincome which is "exempt" (an exemption is made or given) "eliminated" (wasthere, but is no longer, as it was repealed), or "excluded" (denied entry oradmittance into the law). Non exempt, as set forth in the Secretary’s rules, isthat income earned by foreigners here in the U.S. and foreign earned incomeby U.S. Citizens residing in the US, or income earned in the US but the Citizenhas a foreign tax home.

Can you see how the claim that all U.S. Citizens are not subject tothe income tax is legally incorrect? If a U.S. Citizen has 'income' froma listed 'source', then you do have a U.S. Citizen who has income subject tothe 'income tax'.

Can you see how the claim that 'the income tax' is 'unconstitutional'is legally incorrect? The 'income tax' is perfectly constitutional... but itis limited in its application.

The facts reveal that most American’s income has always been "exempt income" asdefined by the Secretary of the Treasury's interpretation of the statutes enacted by the U.S.Congress. There is not much else to say about it as the Congress did not object to theSecretary's regulations.

Since we U.S. Citizens, having been so long intimidated by the volumes and volumes ofwords which make up all of the internal revenue laws (26 USC and CFR), abided in a beliefthat the government would do us no wrong, and were terrified of the idea that we couldhave been acting incorrectly under a law for so long. We have not seen this simple truth, thatthere are no U.S. taxable sources for U.S. Citizens living and working in the U.S.

We say this with renewed vigor, as our position (even before the addition ofthe 3401(a) information) has recently undergone scrupulous examination bytwo CPA’s, one also being a Professor. Both were asked to provide citationsfor the taxable U.S. sources, for U.S. Citizens living and working in the U.S., asthe Secretary had set forth rules regarding Foreign income and Foreigners.They have not bothered; or more likely, are simply unable to provide the law.Our position is that such a law doesn't exist.

Did the Secretary fail to provide such rules, or did he not have astatute to begin with?

It is very important to understand that if a Society which presumes that there are thingswithin a law, it is not only what a law says that is important, but also what it does notsay. For what a law legislates over is included in the law, that which the law does notlegislate over is excluded from the law.

Now the truth behind the income tax is revealed. Now, you can take a simple stand to tell thetruth to the IRS when they ask you to make a claim against yourself, that you had made"Gross income"

Now with the addition of the § 3401(a)(8)(A) information, you can properly inform youremployer, or all of your payers, that they do not have any duty to claim that you are paid"Gross income" when you are not paid "Gross income" as defined by law, and you did notearn "wages" to be withheld from in accordance with § 3402.

For those who join our association, you will receive access to all of our strategies using thelegal definition of "Gross income" for the Administrative handling of State tax matters,Federal Civil matters, Federal Criminal matters, and setting up your case by first informingyour employer/payor that the remuneration paid to you is not included in the definition of"Wages" in § 3401(a)(8)(A). This is designed to cast great doubt upon their claims/returnsstating under penalty of perjury, that you had "wages" and thus "Gross income".

In the Members Hall we will have complete pre-written letters and a myriad of other tools for our members to utilize, based upon the above approach.